December 6, 2015S. Mathews1 Human Geography By James Rubenstein Chapter 9 Key Issue 4 Why Do Less Developed Countries Face Obstacles to Development?

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<ul><li><p>Human Geography By James RubensteinChapter 9Key Issue 4Why Do Less Developed Countries Face Obstacles to Development?</p></li><li><p>In recent years, LDCs have made improvements in development, but the gap between LDCs and MDCs have continued to widen.Natural Increase has dropped 20% in LDCs compared to 83% in MDCs.1/5th of the worlds people (in MDCs) consume 5/6ths of the worlds goods.</p></li><li><p>Progress toward development</p></li><li><p>To reduce disparities between the rich and poor countries, LDCs must develop more rapidly. They must . . . adopt policies that successfully promote development (emphasis is on international trade).They must find funds to pay for the development (emphasis is on self-sufficiency).</p></li><li><p>Elements of Self-Sufficiency Approach1. Spread investment as equally as possible across all sectors of the economy and regions.2. Isolate fledgling businesses from international corporations.3. Set barriers to limit imports.</p></li><li><p>India: Example of the Self-Sufficiency ApproachLimited imports of foreign goodsExports were discouraged.Government approval required for expansion.Businesses subsidized.</p></li><li><p>Problems with the Self-Sufficiency AlternativeInefficiency - protects inefficient businesses.Large Bureaucracy the complex administration, needed to manage controls, encouraged abuse and corruption.</p></li><li><p>Elements of International Trade Approach1. What resources does a country have in abundance that other countries are willing to buy?2. What products can the country manufacture and distribute at a higher quality and lower cost to other countries?</p></li><li><p>*Rostows 5 stage Development ModelThe traditional society.The preconditions for takeoff.The takeoff.The drive to maturity.The age of mass consumption.</p></li><li><p>The Traditional SocietyA very high percentage of population engaged in agriculture.A high percentage of national wealth allocated to nonproductive activities, such as the military and religion.</p></li><li><p>The Preconditions for TakeoffUnder influence of well educated leaders, the country starts to invest in new technology and infrastructure, such as water supplies and transportation systems.</p></li><li><p>The TakeoffRapid growth, technical advances, and high productivity occur in a limited number of economic activities.Other sectors of the economy remain dominated by traditional practices.</p></li><li><p>The Drive to MaturityModern technology diffuses from take-off industries to a wide variety of industries.Workers become more skilled and specialized.</p></li><li><p>The Age of Mass ConsumptionThe economy shifts from production of heavy industry to consumer goods.</p></li><li><p>MDCs are in stages 4 and 5.As a country concentrates on international trade, it benefits from exposure to consumers in other countries.Rostows model suggests that any country can become more developed.</p></li><li><p>Examples of International Trade ApproachPersian Gulf States used petroleum revenues to finance large projects and provide consumers goods.South Korea, Singapore, Taiwan, and Hong Kong used cheap labor to produce and sell products inexpensively.</p></li><li><p>Problems with the International Trade AlternativeUneven Resource DistributionMarket StagnationIncreased Dependence on MDCs</p></li><li><p>Uneven Resource DistributionLDCs suffer when the resource that they have for sale doesnt command a large enough price to enable them to purchase products needed for growth.</p></li><li><p>Market StagnationThe slow growth of MDCs population can and has limited market size of products from LDCs.</p></li><li><p>Increased Dependence on MDCsInvestments in takeoff industries may reduce production of necessities for the population, forcing an LDC to depend on MDCs for those necessities.</p></li><li><p>Recent Triumph of the International Trade ApproachSince India dismantled its barriers to international trade, its per capita GDP has increase from 4% to 6% annually.</p></li><li><p>World Trade OrganizationEstablished in 1995, by countries representing 97% of world trade,to promote, and remove barriers to international trade in all countries.</p></li><li><p>Critics of the WTOLiberals charge the WTO as antidemocratic.Conservatives charge that the WTO compromises the sovereignty of individual countries.</p></li><li><p>Financing DevelopmentLDCs must generally obtain loans from MDCs.From banks and international organizations, andFrom direct investment by transnational corporations.</p></li><li><p>LoansThe World Bank and the International Monetary Fund lend about $50 billion annually to LDCs for development.Commercial banks from MDCs have a current outstanding loans to LDCs totaling $2.1 trillion.</p></li><li><p>Problems with LoansHalf of the projects funded in Africa have ended up as failures.Many LDCs have accumulated debt that exceeds annual income.Lending agencies have had to cancel debt and encouraged LDCs to adopt structural adjustment programs.</p></li><li><p>Debt as a percentage of income</p></li><li><p>Structural Adjustment ProgramsPolicies that create conditions encouraging international trade, such as raising taxes, reducing government spending, controlling inflation, selling publicly owned utilities to private corporations, and charging citizens more for services.</p></li><li><p>Transnational CorporationsCorporations operating in countries other than the one in which its headquarters are located.</p></li><li><p>Flow of Investment</p></li><li><p>Core and PeripheryMost MDCsCore and PeripheryMost MDCs are located above the 30o north latitude.</p></li><li><p>Finis</p></li></ul>